Baylin Announces Financial Results for the First Quarter of 2024

The Quarter Represents a 24% Increase in Revenue and a 36% Increase in Gross Profit compared to the Fourth Quarter of 2023

Investor Conference Call on May 9, 2024 at 8:00 a.m. ET

TORONTO, May 8, 2024 /CNW/ - Baylin Technologies Inc. (TSX:BYL) (the "Company" or "Baylin"), a diversified global wireless technology company focused on the research, design, development, manufacture, and sale of passive and active radio frequency products, satellite communications products, and supporting services, today announced its financial results for the three months ended March 31, 2024. All amounts are stated in Canadian dollars unless otherwise indicated.

FIRST QUARTER SUMMARY

Continuing Operations

• Revenue of $20.1 million in the first quarter of 2024, an increase of $1.3 million or 7.0% compared to the first quarter of 2023. This also represents an increase of $3.9 million or 23.8% compared to the fourth quarter of 2023. The increase was primarily due to sales volume increase in the Embedded Antenna business line. Revenue in the first quarter of 2024 for both Embedded Antenna and Wireless Infrastructure business lines was significantly higher than in the fourth quarter of 2023. Revenue in the Satcom business line was largely consistent with the same prior year period.
• Gross profit of $7.7 million in the first quarter of 2024, an increase of $0.1 million compared to the first quarter of 2023. Gross margin of 38.5% in the first quarter of 2024 compared to 40.6% in the first quarter of 2023 and compared to 35.2% in the fourth quarter of 2023. Compared to the same prior year period, the lower gross margin in the first quarter of 2024 was primarily due to product mix. Wireless Infrastructure revenue as a percentage of total revenue was higher in the first quarter of 2023 and most of its products generate higher gross margins than the other product lines.
• Adjusted EBITDA⁽²⁾ of $0.5 million in the first quarter of 2024, a decrease of $1.1 million compared to the first quarter of 2023. This also represents an increase of $2.6 million compared to the fourth quarter of 2023. Compared to the same prior year period, the decrease in Adjusted EBITDA in the first quarter of 2024 was due to combination of operating expenses, lower relative margins, along with not having the benefit of specific one-time government incentives. Operating expenses in the first quarter of 2023 were lower due to the recognition of the US Employee Retention Tax Credit in the amount of $0.8 million, of which $0.7 million was recorded as a reduction of operating expenses.
• Net loss of $2.0 million in the first quarter of 2024 compared to a net income of $0.9 million in the first quarter of 2023. This also represents an increase of $4.9 million compared to a net loss of $6.9 million in the fourth quarter of 2023. The net loss in the first quarter of 2024 was primarily due to an operating loss of $1.4 million as well as interest and other finance expenses. The positive net income in the first quarter of 2023 was mainly due to a gain on lease termination and sale of non-current assets in the amount of $2.7 million as a result of completing the transfer of the MMU facility lease in Vietnam. On a per share basis, a net loss of $0.01 per share in the first quarter of 2024 compared to a net income of $0.02 per share in the first quarter of 2023.
• Net debt⁽³⁾ from continuing operations of $15.7 million at March 31, 2024, an increase of $2.9 million from December 31, 2023, primarily due to an increase in working capital investment as a result of increasing sales and order backlog during the three months ended March 31, 2024.
• Backlog⁽⁴⁾ from continuing operations of $30.3 million at March 31, 2024 compared to $31.2 million at March 31, 2023. The decrease was mainly due to a lower level of backlog in the Satcom business line, partially offset by an increase in backlog in the Wireless Infrastructure business line as a result of new global opportunities from expansion into new markets. Backlog increased to $33.2 million at April 29, 2024 as a result of an increase in new order intake across all business lines at the start of the second quarter of 2024.

Discontinued Operations (representing the Mobile and Network business line)

• Adjusted EBITDA from discontinued operations of close to $nil in the first quarter of 2024, an increase of $0.7 million compared to the first quarter of 2023. The increase in Adjusted EBITDA was mainly due to an increase in gross profit as a result of improved product mix in the Mobile and Network ("M&N") business line compared to the prior year period.
• Net loss from discontinued operations of $0.8 million in the first quarter of 2024 compared to a net loss of $2.0 million from discontinued operations in the first quarter of 2023. The net loss from discontinued operations in the first quarter of 2024 was mainly due to an operating loss of $0.2 million as well as other finance expenses in the M&N business line. On a per share basis, a net loss of $0.01 per share in the first quarter of 2024 compared to a net loss of $0.03 per share in the first quarter of 2023.

RECENT DEVELOPMENTS

Products

In April 2024, the Company announced that its subsidiary, Advantech Wireless Technologies Inc., had received an award from Artemis - NASA's Lunar Exploration and Colonization Initiative to supply high-power solid state power amplifier ("SSPA") ground station systems to support the Artemis program. Artemis is a multi-phased program to explore the moon, with the goal of establishing the first long-term presence on the moon. Advantech's SSPAs are designed to operate between the earth and moon over cislunar frequencies and are specifically engineered to fit in the interior of large-aperture, full motion antennas as part of NASA's drive to segregate their near space operations (between the earth's surface and two kilometres away) from their deep space operations.

The Company also announced that its subsidiary, Galtronics USA, Inc., had completed a two-month retrofit of Salt Lake City International Airport with its leading high-capacity panel antennas. The airport services over 25 million travellers a year making its significant capacity and throughput requirements a challenge. The antennas deal with this challenge by offering antennas with optimized radiation patterns with optimum range coverage and low interference.

Galtronics was also selected to supply Distributed Antenna System (DAS) antennas for an upgrade to improve coverage and capacity inside London's Heathrow Airport. This represents the Company's first non-North American airport award.

Intellectual Property Infringement Claim

Advantech Wireless Technologies Inc. has recently brought an application in Superior Court in Montreal, Quebec for the issuance of an injunction and damages against 12209454 Canada Inc. (cob as Nextt Microwave), a company controlled by Mr. Frank Panarello, a former employee of Alga Microwave Inc. ("Alga", a predecessor of Advantech), and against Mr. Michael Perelshtein, also a former employee of Alga. The application alleges infringement of Advantech's intellectual property through the use of Advantech's drawings of certain of its proprietary products, which the defendants used to sell transceivers identical to those of Advantech.

SELECTED FINANCIAL INFORMATION

The table below discloses selected financial information for the periods indicated.

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